Failure to notify the option to tax

It is not uncommon for property owners to make an election to waive exemption and commence charging VAT on the rent without formally notifying Customs as required by paragraph 3(6)(b) of Schedule 10 to the VAT Act 1994. This provision specifically requires such notification in order for the election to be effective.

I have been interested to discover that some VAT offices will accept a belated notification in these circumstances while others insist that the option to tax can only be exercised from a current date. Customs' official policy in this matter is published in their VAT Guidance Manual V1-8 Chapter 2 section 9C at paragraph 9.37. This provides that a...